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HOUSTON (

TheStreet

) --

Baker Hughes

(BHI)

said second-quarter earnings fell 77% to $87 million, or 28 cents a share, from year-earlier earnings of $379 million, or $1.23 a share, as drilling activity slowed, particularly in North America.

Earnings in the latest quarter included expenses of 13 cents a share from severance costs and an increase in its allowance for doubtful accounts.

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Revenue in the second quarter dropped 22% to $2.34 billion.

Analysts surveyed by Thomson Reuters expected the oil services company to earn 46 cents a share in the quarter on revenue of $2.25 billion.

Baker Hughes Chairman and CEO Chad Deaton said the decline in activity in North America has been severe, but in recent weeks the market has been "stabilizing."

"We believe the decline in the U.S. rig count is now behind us and we expect a gradual increase in drilling activity beginning in 2010," Deaton said in a statement Wednesday. "Pricing deterioration has slowed and with our cost-cutting efforts we expect the second quarter 2009 to have marked the bottom for North America profitability."

The company said price concessions "will drive international profitability lower in the second half of the year."

-- Reported by Joseph Woelfel in New York

.